Australia's Fairfax Media agrees property arm spin-off

Leading Australian publisher Fairfax Media is poised to spin off its lucrative property arm after shareholders on Thursday overwhelmingly backed the plan to boost the embattled firm's prospects.

Like its international peers, Fairfax, which owns major newspapers including The Sydney Morning Herald and Australian Financial Review, has had its profits squeezed as advertising and circulation slump in the digital age.

But its property advertising Domain Group has benefited from growth in digital classifieds and a booming domestic housing sector, with analysts saying the separation was one way to lift both entities' valuations.

"We are pleased to have received shareholder approval for separation of Domain from Fairfax," chairman Nick Falloon said in a statement.

"This is an important milestone in delivering our strategy to build shareholder value via our leading portfolio of marketplaces, information brands and entertainment assets."

Shares in Fairfax closed 0.46 percent higher to Aus$1.10 in Sydney Thursday.

The next step is a Federal Court hearing for the separation proposal on November 6, with Domain expected to start trading on the Australian Securities Exchanges on November 17.

Under the proposal, Fairfax will own 60 percent of Domain stock while its shareholders will be given one Domain share for every 10 they own in Fairfax.

Fairfax in August posted a return to profit for the year to June 30 after a cost-cutting drive, although advertising revenue for its major newspapers weakened further.

While the global financial downturn in the media sector has hurt many print publishers, broadcasters have also felt the pinch.

One of Australia's three commercial television broadcasters, Seven, saw its share price drop Thursday as chairman Kerry Stokes said its financial results over the past year were "disappointing".

Seven West Media in August reported a Aus$744.3 million (US$574 million) net loss for the year to June 24, compared to Aus$184.3 million net profit in the prior period.

"This has been a tough 12 months for media companies. Seven West Media was not alone," Stokes said.

Shares in Seven ended trading in Sydney Thursday 2.93 percent lower to Aus$13.23.